The formula suggested by the Committee gives 50 per cent weightage to prices in the US, Europe and Japan put together and other 50 per cent weightage is given to the imported LNG (Liquefied Natural Gas) in India, Industry body Fertilizer Association of India (FAI) said in a release.

"There is serious flaw in the formula in the sense that India's import of LNG is very very small -- just 2 per cent of the gas traded in the other regions -- and under a single contract at present and should not be given such a high weightage of 50 per cent in the price formula," FAI said.

The total volume of gas consumed in USA plus Europe plus Japan is estimated at about 1,150 billion cubic metres (BCM) annually, while, India's imports are just 19 BCM, it added.

Any formula should take a weighted average of the entire gas markets taking into account the volumes traded at various prices. The domestic gas is a natural resource. It will be grossly incorrect to link the price of domestic gas with cost of imported gas in India or Japan, the industry body added.

If the recommended formula of pricing of domestic gas is implemented it may increase the price of gas significantly, it said.